The cracks are starting to appear in the ‘paper’ gold market.

BlackRock’s rather shocking decision to halt ETF creation due to gold demand (i.e. being unable to source enough physical gold to meet mandated requirements given the inflows) follows the largest gold ETF inflows since Feb 2009 (just as The Fed started QE1 and unleashed trillions of freshly digitized exuberance into the markets).

As Bloomberg Briefs reports, investor flows into the two largest gold exchange-traded funds topped $5 billion for February.

State Street’s SPDR Gold Shares ETF attracted $4.186 billion for the month and BlackRock’s iShares Gold Trust fund raked in $887 million.

The last time flows were higher the S&P 500 had fallen more than 18 percent for the year and the U.S. Federal Reserve was just three months into its first quantitative easing program to stimulate demand and shore up the financial sector. That was February 2009.

In fact, transparent gold holdings across all instruments has been soaring since the start of 2016.

Source: ShareLynx.com

Given these extremes in demand, and clear signals of discontent with the monetary and fiscal authorities, Casey Research’s Justin Spitttler had some interesting perspectives on what could happen next…

If you’re buying gold right now…the government could be tracking you.

If you’re buying gold, you’re likely not doing it to make money. You’re buying it to make sure you don’t wake up poor one day.

Gold has been used as money for thousands of years because it is easily divisible, easily transportable, has intrinsic value, is durable, and has consistent form around the world. And, as Doug Casey reminds us, it’s a good form of money because governments can’t print it on a whim. You can’t “Bernanke your way” to wealth with gold.

When today’s dramatic central banking experiment blows up, gold will hold its value…unlike paper currencies such as the dollar.